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Lexington Insurance Co. v. 3039 B Street Associates, Inc.

United States District Court, Third Circuit

October 10, 2013

LEXINGTON INSURANCE COMPANY, Plaintiff,
v.
3039 B STREET ASSOCIATES, INC., et al., Defendants.

OPINION

JOEL H. SLOMSKY, District Judge.

I. INTRODUCTION

On July 18, 2013, Marc J. Grossman Associates ("MJGA") filed a Motion to be joined as an additional defendant in this interpleader action, Lexington Ins. Co. v. 3039 B Street Assocs., Inc., et al. (Doc. No. 24.) The Motion is now before the Court, and for reasons that follow, the Motion will be granted.[1] MJGA will be joined as a Defendant.

II. BACKGROUND

The company known as 3039 B Street Associates, Inc. ("3039 B") owned real estate in Philadelphia, Pennsylvania, at the address it uses in its name. This property (the "Property") was insured by a hazard insurance policy (the "Policy") issued by Lexington Insurance Company ("Lexington"). (Doc. No. 1 at ¶ 7.) The Policy was effective from June 30, 2009 to June 30, 2010 and contained a clause which named Investors Trust LC ("Investors") as the mortgagee. (Id. at ¶¶ 7-8.) Investors is a lender that lent money to 3039 B to purchase the Property in 2005. (Doc. No. 25 at 1.) In return, Investors placed a mortgage on the Property. (Id.) In January 2010, the Property was vandalized and damaged when copper materials were stolen. (Id. at 2.) That same month, 3039 B submitted a claim to Lexington for the loss it sustained (the "2010 Loss Claim"). (Doc. No. 31 at 1.)

MJGA is a public adjuster firm. On or about January 19, 2010, MJGA entered into a contract with 3039 B (the "Contract") to advise and assist 3039 B on the claim that was submitted to Lexington for the damage to the Property. (Doc. No. 24 at ¶ 3.) Pursuant to the Contract, MJGA is entitled to receive ten percent (10%) of any proceeds paid by Lexington in settlement of the claim. (Id. at ¶ 5, Exhibit A.) After MJGA completed its work on the claim, Lexington agreed to pay $206, 349.72 to cover the loss. (Doc. No. 1 at ¶ 11.)[2]

On December 5, 2012, Lexington filed the present interpleader action, naming only 3039 B and Investors as Defendants. (Id. at ¶ 12.) Lexington agrees it is obligated to pay $130, 041.98 (the "Proceeds")[3] under the Policy, but filed the interpleader action because of a dispute between 3039 B and Investors over who is entitled to receive the Proceeds. On July 18, 2013, MJGA filed the instant Motion to Join as an Additional Defendant, arguing that pursuant to its Contract with 3039 B, MJGA is entitled to ten percent of the Proceeds and reimbursement for appraisal fees, totaling $16, 835.44. (Doc. No. 24 at ¶¶ 4-5.) On July 31, 2013, Investors filed its Response in Opposition to the Motion. (Doc. No. 25.)

In a Supplemental Memorandum of Law in Opposition to the Motion, Investors alleged that the Contract between MJGA and 3039 B is void because MJGA did some work on the 2010 Loss Claim during the period from August 24, 2009 through February 24, 2010 when its public adjuster license was suspended. (Doc. No. 31 at 6-7.) Pursuant to a 2009 Consent Order between MJGA and the Insurance Department of the Commonwealth of Pennsylvania, MJGA's license was suspended during that time due to certain violations unrelated to the 2010 Loss Claim at issue here. (See Doc. No. 31, Exhibit A.) During the period of MJGA's license suspension, however, MJGA engaged in the following activities apparently in violation of the 2009 Consent Order:

[1] On January 26, 2010, [MJGA], acting in the capacity as a public adjuster, submitted an Accord Property Loss Notice[4] to Independent Insurance Advisors on behalf of 3039 B Street Associates, Inc. (the Insured), with Lexington Insurance Company.[5]
[2] On February 22, 2010, [MJGA], acting in the capacity as a public adjuster, conducted an inspection of the premises of 3039 B Street Associates, Inc. with Crawford & Company's Property General Adjuster Kyle Cheney regarding the [2010 Loss Claim].[6]

(Doc. No. 31, Exhibit B at 2-3.)

On April 4, 2011, the Insurance Department of the Commonwealth of Pennsylvania and MJGA agreed to the entry of another Consent Order against MJGA for engaging in these activities while its public adjuster license was suspended. (Doc. No. 31, Exhibit B.) This 2011 Consent Order directed MJGA to cease and desist from engaging in the violations listed above, and MJGA was ordered to pay a $1, 000 fine. (Id. at 5.) That fine was paid. MJGA's license was not suspended. Thereafter, MJGA performed the balance of the work on the loss incurred by 3039 B without further violations.

III. LEGAL STANDARD

Fed. R. Civ. P. Rule 19 covers mandatory joinder of parties, while Rule 20 concerns permissive ...


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